Over time, some families build a large estate. It’s just not easy to manage many assets and that’s why some people choose to open a family holding company. This strategy usually brings a number of benefits.
For example, reduction in Income Tax and efficiency in property succession. So, it is worth finding out regarding how to open a holding company. It’s time to learn more regarding it and understand – in fact – the concept and see how to assemble one.
What we will see in this article:
What is a family holding company and what are the benefits?
Family holding is a type of legal entity created to facilitate the administration of a family’s assets. It is even sometimes referred to as an investment holding company. It is useful for families with a large wealth and the need to take care of it more efficiently.
After the creation of the holding company, all assets are transferred from individuals to the legal entity. The family members are partners in this company, which, in turn, manages the business and the money of all those involved.
And do you know what are the benefits of a family holding company? See the two main ones:
- With good tax planning, one of the advantages is the possibility of reducing income tax.
- Another benefit is the efficiency of succession planning. In the event of the death of one of the partners, for example, the assets can be transferred in a simple way. This includes real estate, investments, businesses and so on.
After all, all the rules for transferring assets are contained in the articles of incorporation. Thus, the family does not have to deal with a complex and problematic inventory. For these reasons, you can see that a family holding company facilitates the management of a family’s assets.
how to open one holding familiar?
After all, how to open a family holding company? Well, to create a holding company, you can follow the steps in the next topics. See below:
Before creating a company to manage assets, it is necessary to analyze all the assets involved. This includes the properties of the person establishing the legal entity, as well as those of the beneficiaries.
One of the reasons is that, depending on the volume of equity, it may not be worth creating a holding company. After all, there are costs involved with accounting services and even a lawyer, if any.
The assessment also includes an analysis of each partner’s companies. In this way, it is possible to define the best corporate model to be applied in the family holding company.
Next, define who will be the partners of your family holding company. After that, it’s critical that you meet with them to understand what their perspectives are. Including, the meeting is an important step to align everyone’s expectations.
One of the main issues to be addressed is the succession of assets. Just as you have a line of succession in mind for your assets, the partners also have plans for theirs. Therefore, when meeting with everyone, try to understand what they plan in terms of transferring assets.
This information will be needed later on, when preparing the documentation. By acting in this way, you will ensure that succession planning takes place according to each one’s wishes.
- Define the corporate type
The next step is to define the corporate type of the holding company. Usually, the most used are the joint-stock company and the limited company. One of the characteristics of the corporation is the distribution of shares among the partners. They can even be ordinary or preferred.
Those who have the former can vote in the assemblies, while the others do not grant this right. In a joint-stock company, there is also the possibility for a partner to sell his Shares to third parties. In addition, this type of company generally has a higher cost.
There are people who opt for a limited liability company, especially because it contributes to the protection of family assets. The reason is that, in this type of society, there is greater freedom in the elaboration of the social contract.
In this way, it is possible to guarantee that the partners will not be allowed to sell their participation to third parties, for example. In addition, the constitution of the company presents greater simplicity. As for registering with the Board of Trade, the cost is usually lower.
Naturally, it cannot be said that one corporate type is ideal for all families. Each one needs to analyze their own situation and understand which one can best meet the needs of the members.
- Do tax planning
This is a fundamental step in starting any business. After all, planning choices can have a big impact on her tax burden.
Therefore, careful tax planning is necessary to avoid unnecessary tax payments. Depending on the model chosen, your holding company may save on the expense.
After you and your partners have already defined the corporate type and done the tax planning, you need to take care of the documentation. One of the essential documents is the articles of incorporation, which must include all the succession rules defined at the shareholders’ meeting.
The documents must be registered with the competent bodies. It is even during the preparation of documentation that the assets of individuals are transferred to the holding company. It is precisely this step that guarantees the protection of the heritage.
- Count on qualified professionals
As you can see, creating a family holding company requires a lot of care. As it is a legal entity, it is essential to rely on the services of professionals. For example, accounting.
You may want to look for professionals who specialize in family holdings. A lawyer can also be very helpful in this process. This way, you can ensure that everything works as expected.
Now that you know how to open a family holding company, start by analyzing your assets. This step is essential to understand if it can be advantageous for your family. Taking good care of your heritage, your business will be better managed and your legacy will be strengthened!
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